Rouble, Russian stocks hit over 5-week highs in early Moscow trade

The Russian rouble touched a more than five-week high in early Moscow trade on Friday before settling close to 83 to the dollar, and Russian stocks edged higher, with investors eyeing events in Ukraine and an ongoing gas payments saga.

At 0741 GMT, the rouble was 0.1% weaker against the dollar at 83.25 , earlier clipping 80.3325, its strongest mark since Feb. 23. It had gained 0.2% to trade at 92.29 versus the euro .

On the interbank market, the rouble was as strong as 75 against the dollar earlier this week and was hovering near 82 on Wednesday. The rouble was at 83 to the dollar on the EBS electronic platform .

President Vladimir Putin threatened on Thursday to halt contracts supplying Europe with a third of its gas unless they are paid in Russian currency, an ultimatum the continent’s biggest recipient of Russian gas, Germany, called “blackmail”.

European buyers of Russian gas faced a deadline to start paying in roubles on Friday. Moscow has offered a mechanism for buyers to obtain roubles via a Russian bank.

Dynamics driving the rouble lately are to some extent artificial. The currency, which had been free-floating until late February, is now steered by capital controls, a ban on buying cash dollars and euros and other administrative measures.

Russia’s central bank said it was softening restrictions on foreign fund transfers for individuals for six months, permitting limited monthly transfers in foreign currency that may ease the strain on Russians who regularly send funds to relatives abroad.

The bank said the measures would not apply to people from countries that have supported sanctions against Moscow.

“This step looks like a signal that if the rouble strengthens further, we can expect further measures to reduce currency control restrictions,” said Promsvyazbank analysts in a note.

Russian stock indexes were at their highest since before Russia sent tens of thousands of troops into neighbouring Ukraine on Feb 24.

The dollar-denominated RTS index was up 4.1% to 1,063.2 points.

The rouble-based MOEX Russian index was 4.1% higher at 2,813.6 points. Both indexes were at their highest since Feb. 22.

Shares in energy giant Gazprom were up around 5.7%.